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ARIZONA’S NEW RECEIVERSHIP STATUTE: REVIEWED, INTERPRETED AND APPLIED©, PART XV

September 25, 2020

Receiver As Lien Creditor.

A significant right vested in receivers under the Act is the status of a lien creditor having priority over unperfected security interests in personal property and priority over unrecorded liens on real property. A.R.S. §33-2608.  This section does not give the receiver the power to void unperfected liens as the authors of the UCRERA observed in their comment to Section 9.  “Section 9 does not create (and is not intended to create) an ‘avoiding power’ in the receiver analogous to the strong-arm power exercisable by a bankruptcy trustee under Bankruptcy Code § 544(a).”  UCRERA, §9 at p. 33.

This means that the receiver would receive proceeds in excess of a perfected security interest or unrecorded deed of trust before anything is paid to the holder of the unperfected lien in the same property.  This is true even as to real estate in Arizona because the holder of a judgment lien on real property would be senior to the holder of an unrecorded deed of trust, pursuant to A.R.S. §33-812(A)(listing the order of payment to creditors of proceeds at a trustee’s sale).

Unanswered is the amount of a receiver’s lien under Section 33-2608. Will the aggregate amount owed to all unsecured creditors plus the fees and costs of the receiver be subject to the receiver’s lien with priority over the unperfected lien of a lender?   Or is it only the amount owed to the receiver for her fees and costs entitled to the priority accorded by this provision?   There is nothing in the Act or the comments to UCRERA which answers these questions or provides any guidance to practitioners or judges.

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